FORMULA GRANTS FOR RURAL AREAS: PROGRAM GUIDANCE AND APPLICATION INSTRUCTIONS

U.S. Department of Transportation Federal Transit Administration PROPOSED CIRCULAR FTA C 9040.1G Subject: FORMULA GRANTS FOR RURAL AREAS: PROGRAM GUIDANCE AND APPLICATION INSTRUCTIONS 1. PURPOSE. This circular is a re-issuance of guidance on the administration and preparation of grant applications for the Formula Grants for Rural Areas Program under 49 U.S.C. 5311. This revision incorporates provisions of the Moving Ahead for Progress in the 21 st Century Act (MAP-21; Pub. L. 112-141 (2012)), and includes the most current available guidance as of the date of publication. 2. CANCELLATION. When final, this circular will cancel FTA Circular 9040.1F, Nonurbanized Area Formula Program Guidance and Grant Application Instructions, dated April 1, 2007. 3. AUTHORITY. a. Federal Transit Laws, Title 49, United States Code, Chapter 53. b. 49 CFR 1.51. 4. WAIVER. FTA reserves the right to waive any provisions of this circular to the extent permitted by Federal law or regulation. 5. FEDERAL REGISTER NOTICE. [FTA will insert when final circular is published] 6. AMENDMENTS TO THE CIRCULAR. FTA reserves the right to amend this circular to reflect changes in other revised or new guidance and regulations that undergo notice and comment without further notice and comment on this circular. FTA will post updates on our website at www.fta.dot.gov. The website allows the public to register for notification when FTA issues Federal Register notices or new guidance. Please visit the website and click on Connect with FTA for more information. 7. ACCESSIBLE FORMATS. This document is available in accessible formats upon request. To obtain paper copies of this circular as well as information regarding these accessible formats, call FTA s Administrative Services Help Desk, at 202 366 4865. Individuals with hearing impairments may contact Federal Relay Service at 1-800-877-8339 for assistance with the call. Peter M. Rogoff Administrator

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SECTION 5311 PROGRAM CIRCULAR TABLE OF CONTENTS CHAPTER PAGE I. INTRODUCTION AND BACKGROUND... I 1 1. The Federal Transit Administration (FTA)... I 1 2. Authorizing Legislation... I 1 3. How to Contact FTA... I 1 4. Definitions... I 2 5. Program History... I 4 II. III. IV. PROGRAM OVERVIEW... II 1 1. Statutory Authority... II 1 2. Program Goals... II 2 3. State Role in Program Administration... II 4 4. FTA Role in Program Administration... II 5 5. Relationship to Other FTA Programs... II 6 GENERAL PROGRAM INFORMATION... III 1 1. Apportionments... III 1 2. Eligibility... III 5 3. Eligible Activities...III-7 4. Federal/Local Matching Requirements...III 13 PROGRAM DEVELOPMENT... IV 1 1. Fair and Equitable Distribution... IV 1 2. Planning Requirements... IV 1 3. Performance Based Planning... IV 2 4. Intercity Bus Consultation Requirement... IV 2 5. Program of Projects... IV 2 6. Certifications and Assurances... IV 7 7. Pre-Award Authority... IV 7 8. Grant Award and Project Approval... IV 8 V. PROGRAM MANAGEMENT AND ADMINISTRATIVE REQUIREMENTS... V 1 1. General... V 1 2. Program Administrative Requirements... V 1 3. Equipment Management... V 2 4. Satisfactory Continuing Control and Responsibility... V 3 5. Procurement... V 3 6. Financial Management... V 6 7. FTA Electronic Award Management System... V-7

PROPOSED FTA C 9040.1G Page iii CHAPTER PAGE 8. System for Award Management Requirements... V-7 9. Data Universal Numbering System (DUNS) Registration Requirements... V-8 10. Subrecipient DUNS Requirement... V-8 11. Electronic Clearing House Operation (ECHO) Requirements... V-8 12. Federal Funding Accountability and Transparency Act (FFATA) Requirements... V-9 13. Allowable Costs...V-10 14. Closeout...V-11 15. Audit...V-11 16. Real Property...V-11 17. Construction Management and Oversight...V-11 18. Reporting Requirements...V-11 19. State Management Plan V-12 20. FTA Management Review...V-12 VI. VII. VIII. STATE MANAGEMENT PLAN... VI 1 1. General... VI 1 2. Purpose... VI 1 3. State Management Reviews... VI 1 4. State Management Plan Content... VI 1 5. State Management Plan Revisions... VI 4 APPALACHIAN DEVELOPMENT PUBLIC TRANSPORTATION ASSISTANCE PROGRAM. VII-1 1. Program Summary..VII-1 2. National Program Objectives.VII-1 3. Eligible Recipients.VII-1 4. Eligible Services and Services Areas.VII-1 5. Formula Allocations...VII-3 6. Funds Availability...VII-3 7. Eligible Projects..VII-3 8. Local Share..VII-4 9. Program Administration..VII-4 10. Transfer Provisions..VII-4 11. Statewide Transportation Improvement Program and/or Transportation Improvement Program Requirement VII-4 INTERCITY BUS...VIII 1 1. Program Summary...VIII 1 2. National Objectives...VIII 1 3. Governor s Certification...VIII 1 4. Consultation Process Requirement...VIII 2

5. In-Kind Match... VIII 4 6. Eligible Subrecipients...VIII 7 7. Eligible Services and Service Areas...VIII 7 8. Eligible Activities...VIII 8 9. Feeder Service...VIII 9 10. ADA Regulations...VIII 9 11. Federal Share.....VIII 10 12. Capital Projects in Urbanized Areas...VIII 10 13. Obligation of Funds...VIII 10 14. Surface Transportation Program......VIII 11 IX. RURAL TRANSPORTATION ASSISTANCE PROGRAM...IX 1 1. Program Summary.....IX 1 2. Program Objectives.....IX 1 3. Funding and Allocations....IX 1 4. State Program Development and Delivery....IX 2

PROPOSED FTA C 9040.1G Page v CHAPTER PAGE 5. Program Management... IX 4 6. National Program... IX 4 7. Other Technical Assistance Resources... IX 4 X. PUBLIC TRANSPORTATION ON INDIAN RESERVATIONS 1. Program Summary...X-1 2. National Program Objectives...X-1 3. Eligible Recipients...X 1 4. Eligible Services and Service Areas...X 1 5. Formula Program...X 2 6. Discretionary Program Eligibility...X 2 7. Terms and Conditions...X 2 8. Matching Requirements...X 3 9. Indirect Cost Rate...X 3 10. STIP/TIP Requirements...X 3 11. Funds Availability...X 3 12. Program Assistance...X 3 13. National Transit Database...X-3 XI. OTHER PROVISIONS...XI 1 1. Introduction...XI 1 2. Charter Bus Service...XI 1 3. Civil Rights Requirements...XI 2 4. Clean Air Act XI 6 5. Commercial Driver s License..XI-6 6. Drug and Alcohol Testing.XI 6 7. Drug-Free Workplace XI 7 8. Employee Political Activity....XI-8 9. Environmental Justice XI 8 10. Environmental Reviews.XI 8 11. Labor Protections.XI 9 12. Lease vs. Buy Considerations...XI 9 13. Pre-Award Authority.XI 9 14. Private Sector Participation... XI 11 15. Procurement Restrictions...XI-11 16. Real Property Acquisition and Relocation Assistance... XI 12 17. Restrictions on Lobbying. XI-12 18. Safety and Security... XI 13 19. School Bus Transportation... XI 13

APPENDICES APPENDIX A APPENDIX B APPENDIX C APPENDIX D APPENDIX E APPENDIX F APPENDIX G APPENDIX H APPENDIX I INSTRUCTIONS FOR PREPARING A GRANT APPLICATION TO FTA SAMPLE SECTION 5311 PROGRAM OF PROJECTS SECTION 5311 BUDGET INFORMATION PROCEDURES RELATED TO TRANSFERS OF FLEXIBLE FUNDS SAMPLE INTERCITY BUS CERTIFICATION INTERCITY BUS IN-KIND MATCH CAPITAL COST OF CONTRACTING FTA REGIONAL AND METROPOLITAN CONTACT INFORMATION REFERENCES

PROPOSED FTA C 9040.1G Page I-1 CHAPTER I INTRODUCTION AND BACKGROUND 1. THE FEDERAL TRANSIT ADMINISTRATION (FTA). The Federal Transit Administration (FTA) is one of ten modal administrations within the U.S. Department of Transportation (DOT), and is headed by an Administrator appointed by the President of the United States. The Federal Transit Administration functions through a headquarters office in Washington, DC, ten regional offices, and five metropolitan offices. These offices assist transit agencies in all 50 States, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, the Northern Mariana Islands, American Samoa, and federally recognized Indian Tribes. Public transportation means regular, continuing shared-ride surface transportation services that are open to the general public or open to a segment of the general public defined by age, disability, or low income. Public transportation generally includes, but is not limited to, transportation services provided by buses, heavy rail, light rail, commuter rail, fixed guideway, bus rapid transit, passenger ferry boats, trolleys, inclined railways, people movers, vans, streetcars, jitneys and aerial tramways. Public transportation can be either fixed-route or demand-response service, but excludes intercity passenger rail provided by Amtrak, intercity bus service, charter bus service, school bus service, sightseeing services, courtesy shuttle services provided by individual businesses and intra-terminal or intra-facility shuttle services. The Federal government, through FTA, provides financial assistance to develop new transit systems and improve, maintain, and operate existing systems. FTA oversees thousands of grants to hundreds of State and local transit providers, primarily through its ten regional offices. These recipients are responsible for managing their programs in accordance with Federal requirements, and FTA is responsible for ensuring that recipients follow Federal statutory and administrative requirements. 2. AUTHORIZING LEGISLATION. Most Federal transit laws are codified at Title 49 U.S.C. Chapter 53. Authorizing legislation is substantive legislation enacted by Congress that establishes or continues the legal operation of a Federal program or agency. FTA s most recent authorizing legislation is the Moving Ahead for Progress in the 21 st Century Act (MAP-21), Pub. L. 112-141, signed into law on July 6, 2012 and effective on October 1, 2012. This circular reflects changes to Federal transit law as well as changes required by other laws that have become effective since the circular was last published in April 2007. 3. HOW TO CONTACT FTA. FTA s regional and metropolitan offices are responsible for providing financial assistance to FTA recipients and oversight of grant implementation for most FTA programs. Certain specific programs are the responsibility of FTA s headquarters offices. Inquiries should be directed to either the regional or metropolitan office responsible for the geographic area in which the recipient is located. See Appendix H, FTA Regional and Metropolitan Contact Information, of this circular for more information.

Page I-2 PROPOSED FTA C 9040.1G Visit FTA s website, http://www.fta.dot.gov, or contact FTA Headquarters at the following address and phone number: Federal Transit Administration Office of Communications and Congressional Affairs 1200 New Jersey Avenue SE East Building Washington, D.C. 20590 Phone: 202 366 4043 Fax: 202 366 3472 4. DEFINITIONS. All definitions in 49 U.S.C. 5302 and 5311 apply to this circular, as well as the following. a. Appalachian Region: The term Appalachian Region has the same meaning as in title 40 U.S.C. 14102. Appalachian Region means an area of the eastern United States consisting of several counties from the following states: Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia. b. Applicant: In this circular, the term applicant is used to identify an entity that is seeking, but has not yet been awarded, specific Federal financial assistance directly from FTA. The term applicant is used interchangeably with grant applicant. c. Capital Asset: Facilities or equipment with a useful life of at least one year. d. Capital Project: A category of reimbursable project expenses that includes all activities identified in 49 U.S.C. 5302(3). Eligible activities under this project category are explained in Chapter III of this circular. e. Consultation: means one party confers with another identified party in accordance with an established process and, before taking action(s), considers that party s views and periodically informs that party about action(s) taken. f. Coordinated Plan: See Locally Developed, Coordinated Public Transit-Human Services Transportation Plan. g. Electronic Clearing House Operation (ECHO) System: ECHO is a FTA Web-based application system that processes draw-down payment requests from FTA recipients. h. Electronic Grant Management System: A system that recipients and FTA use to manage grant applications, including the review, approval, and management of all grants. This system is used by recipients to submit financial status reports and milestone progress reports and to submit grant modification requests; this term includes FTA s Transportation Electronic Award Management (TEAM) system and its successor. i. Eligible low-income individual: The term eligible low-income individual means an individual whose family income is at or below 150 percent of the poverty line (as that

PROPOSED FTA C 9040.1G Page I-3 term is defined in section 673(2) of the Community Service Block Grant Act (42 U.S.C. 9902(2)), including any revision required by that section) for a family of the size involved. j. Equipment: An article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the governmental unit for financial statement purposes, or $5,000. Equipment includes rolling stock and all other such property used in the provision of public transit service. k. Federally Recognized Indian Tribal Government: means the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community, (including any native village as defined in Section 3 of the Alaska Native Claims Settlement Act, (43 U.S.C. 1601 et seq.) certified by the Secretary of the Interior as eligible for the special programs and service provided through the Bureau of Indian Affairs. l. Force Account: The use of a recipient s own labor force to accomplish a capital project. m. Governor: The term Governor means the Governor of a State, the mayor of the District of Columbia, and the chief executive officer of a territory of the United States; and includes the designee of the Governor. n. Grant: An award of financial assistance, including a Cooperative Agreement, in the form of money, or property in lieu of money, by the Federal Government to an eligible recipient or recipient. Used interchangeably with Grant Agreement. o. Grant Application: A complete application for an award of financial assistance, including cooperative agreements, in the form of money, or property in lieu of money, by the Federal Government to an eligible recipient. p. Intercity Bus Service: means regularly scheduled bus service for the general public that operates with limited stops over fixed routes connecting two or more urban areas not in close proximity, that has the capacity for transporting baggage carried by passengers, and that makes meaningful connections with scheduled intercity bus service to more distant points, if such service is available. q. Job Access and Reverse Commute (JARC) Project: The term job access and reverse commute project means a transportation project to finance planning, capital, and operating costs that support the development and maintenance of transportation services designed to transport welfare recipients and eligible low-income individuals to and from jobs and activities related to their employment, including transportation projects that facilitate the provision of public transportation services from urbanized areas and rural areas to suburban employment locations. r. Local Governmental Authority: The term local governmental authority includes a political subdivision of a State; an authority of at least one State or political subdivision

Page I-4 PROPOSED FTA C 9040.1G of a State; an Indian tribe; and a public corporation, board, or commission established under the laws of a State. s. Locally Developed, Coordinated Public Transit-Human Services Transportation Plan: A plan that identifies the transportation needs of individuals with disabilities, older adults, and people with low incomes, provides strategies for meeting those local needs, and prioritizes transportation services for funding and implementation. t. Master Agreement: The FTA official document containing FTA and other cross-cutting Federal requirements applicable to the FTA recipient and its project(s). The Master Agreement is incorporated by reference and made part of each FTA grant, cooperative agreement, and amendment thereto. u. Metropolitan Planning Organization (MPO): The policy board of an organization designated in cooperation with the State and public transportation operators to carry out the metropolitan planning process, including development of long-range transportation plans and transportation improvement programs for metropolitan planning areas of a State. v. Mobility Management: Consists of short-range planning and management activities and projects for improving coordination among public transportation and other transportationservice providers carried out by a recipient or subrecipient through an agreement entered into with a person, including a government entity, under 49 U.S.C. Chapter 53 (other than Section 5309). Mobility management does not include operating public transportation services. w. National Transit Database (NTD): The NTD is FTA s primary source for information and statistics collected from transit systems that receive FTA formula funding under the Urbanized Area Formula Program (Sec. 5307) or Rural Area Formula Program (Sec. 5311). Public transportation systems receiving funds from these programs are required by statute to report to the NTD. x. Preventive Maintenance: All maintenance costs related to vehicles and non-vehicles. Specifically, it is defined as all the activities, supplies, materials, labor, services, and associated costs required to preserve or extend the functionality and serviceability of the asset in a cost effective manner, up to and including the current state of the art for maintaining such an asset. y. Pre-Award Authority: means authority given under specific and limited circumstances to incur costs for eligible projects before a grant is made without prejudice to possible Federal participation in the cost of the projects(s). Applicants must comply with all Federal requirements. Failure to do so will render a project or costs ineligible for FTA financial assistance. z. Program of Projects: A list of projects to be funded in a grant application submitted to FTA by a State. The program of projects lists the subrecipients and indicates whether they are private non-profit agencies, public bodies, or private providers of transportation service, designates the areas served (including Congressional Districts), and identifies

PROPOSED FTA C 9040.1G Page I-5 any tribal entities. The program of projects also identifies intercity bus and RTAP projects. In addition, the program of projects includes a brief description of the projects, total project cost and Federal share for each project, and the amount of funds used for program administration from the 10 percent allowed. aa. Public Transportation: The term public transportation means regular, continuing sharedride surface transportation services that are open to the general public or open to a segment of the general public defined by age (older adults), disability, or low income; and does not include: intercity passenger rail transportation provided by the entity described in Chapter 243 (Amtrak) (or a successor to such entity); intercity bus service; charter bus service; school bus service; sightseeing service; courtesy shuttle service for patrons of one or more specific establishments; or intra-terminal or intra-facility shuttle services. bb. Rebuild: Rebuild is a capital expense associated with rolling stock that occurs at or near the end of a unit of rolling stock s useful life, and which results in an extended useful life for the unit of rolling stock consistent with the extent of the rebuilding. cc. Recipient: For purposes of this circular, the term recipient means an entity that receives a grant of Formula program funds directly from FTA. For purposes of this circular, the word recipient is used interchangeably with direct recipient, and recipient. dd. Regional Transportation Planning Organization (RTPO): Designated organization to enhance the planning, coordination, and implementation of statewide strategic long-range transportation plans and transportation improvement programs, with emphasis on addressing the needs of nonmetropolitan areas of the State. ee. Rural Area: The term rural area means an area encompassing a population of less than 50,000 people that has not been designated in the most recent decennial census as an urbanized area by the Secretary of Commerce. ff. Senior: The term senior means an individual who is 65 years of age or older. gg. Shared Use: Those instances in which a project partner, separate from the transit agency or recipient, occupies part of a larger facility and pays for its pro rata share of the construction, maintenance, and operation costs. Shared uses are determined at the time of grant award. hh. Small Urbanized Areas: As used in the context of FTA formula grant programs, are UZAs with a population of at least 50,000 but less than 200,000. ii. State: The term State means a State of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, Guam, American Samoa, and the Virgin Islands. jj. Statewide Transportation Improvement Program (STIP): A statewide prioritized listing/program of federally funded transportation projects covering a period of four years that is consistent with the Long-Range Statewide Transportation Plan, Metropolitan

Page I-6 PROPOSED FTA C 9040.1G Transportation Plans (MTPs), and Transportation Improvement Program (TIP), and required for projects to be eligible for funding under title 23 of the U.S. Code and 49 U.S.C. chapter 53. kk. Subrecipient: means a State or local governmental authority, a non-profit organization, or operator of public transportation or intercity bus service that receives Federal transit program grant funds indirectly through a recipient. ll. Takedown: means an amount or percentage subtracted from the total dollar amount appropriated for a Federal program before other apportionment or allocation of the funds. For example: The Tribal Transit Program and Rural Transportation Assistance Program (RTAP) is a takedown from the total amount appropriated by Congress under the Formula Grants for Rural Areas Program (Section 5311). mm. Transportation Improvement Program (TIP): A prioritized listing/program of transportation projects covering a period of four years that is developed and formally adopted by a MPO as part of the metropolitan transportation planning process, consistent with the MTP, and required for projects to be eligible for funding under title 23 of the U.S. Code and 49 U.S.C. Chapter 53. nn. Transit: The term transit means public transportation. oo. Urbanized Area (UZA): means an area encompassing a population of not less than 50,000 people that has been defined and designated in the most recent decennial census as an urbanized area by the Secretary of Commerce. pp. Welfare Recipient The term welfare recipient means an individual who has received assistance under a State or tribal program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) at any time during the 3-year period before the date on which the applicant applies for a grant under section 5307 or 5311. 5. PROGRAM HISTORY. Before 1978, most Federal transit assistance went to urban areas. In that year, in response to a DOT proposal, Congress created a new program through Section 313(a) of the Federal Public Transportation Act of 1978 (Pub L. 95 599). The new program, which created Section 18 of the Urban Mass Transportation Act (49 U.S.C. App. 1601 et seq.), provided public transportation funds for services in areas with populations of less than 50,000. The Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA) (Pub. L. 102 240), continued funding the program and introduced support for intercity bus service as a requirement under the rural program and formally authorized the Rural Transportation Assistance Program (RTAP). In 1994, legislation codified the Federal transit program, changing the citation for the rural transit program from 49 U.S.C. app. 18, to 49 U.S.C. 5311. The Transportation Equity Act for the 21 st Century (TEA 21) (Pub L. 105 178) increased funding for all transit, including Section 5311. Furthermore, TEA 21 established guaranteed funding levels for Section 5311 programs. By 2003, the end of TEA 21 s authorization period, annual Federal rural transit funding reached $240 million, an 80 percent increase

PROPOSED FTA C 9040.1G Page I-7 from 1998 and a 266 percent increase from 1991. The Flex fund transfer provision allowed States the ability to transfer additional funds to rural transit from their flexible funds available for either highway or transit projects and the formula transit funds for the small urbanized areas (between 50,000 and 200,000 population). This provision significantly increased the funding available for rural transit. The Safe, Affordable, Flexible, Efficient, Transportation Act a Legacy for Users (SAFETEA LU) greatly increased funding for rural transit, proportionally more than the increase for other FTA programs. SAFETEA LU also supplemented Section 5311 funding for growing States under the Section 5340 formula. SAFETEA LU also established a new Tribal Transit Program as a takedown from Section 5311, and linked funding for RTAP to Section 5311 funding levels. The Moving Ahead for Progress in the 21 st Century Act (MAP-21) brought significant changes to the Formula Grants for Rural Areas Program, authorizing $599.5 million in fiscal year 2013, and $607.8 million in fiscal year 2014. MAP-21 adds new programs, in addition to changing the previously existing formula, program eligibility, and the set-asides that support other rural transit programs.

PROPOSED FTA C 9040.1G Page II-1 CHAPTER II PROGRAM OVERVIEW 1. SECTION 5311 STATUTORY AUTHORITY. The Formula Grants for Rural Areas Program, codified at 49 U.S.C. 5311 (Section 5311) is authorized under the provisions set forth in the Moving Ahead for Progress in the 21 st Century Act (MAP-21), Public Law 112-141. Under this program, funding assistance is provided for public transportation in rural areas. The Federal Transit Administration (FTA), on behalf of the Secretary of Transportation, apportions the funds appropriated annually to the Governor of each State and federally recognized Indian Tribes for public transportation projects in rural areas. The code assigned to Section 5311 grants in the Catalogue of Federal Domestic Assistance is 20.509. FTA s Formula Grants for Rural Areas Program is also referred to as the Section 5311 program. The Section 5311 program includes: the Appalachian Development Public Transportation Assistance Program; the Rural Transit Assistance Program (RTAP); and the Tribal Transit Program. The Tribal Transit Program has both a discretionary and a formula program. For the formula grants for rural areas 83.15 percent of funds are apportioned based on land area and population factors. The other 16.85 percent is apportioned based on land area, vehicle revenue miles, and the ratio of low-income individuals residing in rural areas. No State may receive more than five percent of the amount apportioned for land area or vehicle revenue miles. In addition, FTA adds amounts apportioned based on rural population according to the growing States formula factors of 49 U.S.C. 5340 to the amounts apportioned to the States under the Section 5311 formula. Annually, each State prepares and submits to FTA a program of projects. A State s program of projects must provide for fair and equitable distribution of funds within the State, including Indian reservations, and provide for maximum feasible coordination with transportation services assisted by other Federal sources. A State may pass through its Section 5311 program funds to subrecipients that are State or local governmental authorities, non-profit organizations, operators of public transportation services, or intercity bus operators. A State may use Section 5311 program funds for capital projects, operating assistance, planning, job access reverse commute projects, and the acquisition of public transportation services, including service agreements with private providers of public transportation. The State may also use up to 10 percent of its Section 5311 program funds to administer the program and provide technical assistance to subrecipients. Technical assistance includes project planning, program and management development, public transportation coordination activities, and research the State considers appropriate to promote effective delivery of public transportation in rural area. Planning activities are an eligible expense under Section 5311, and shall be in addition to funding awarded to a State under section 5305 for planning activities that are directed specifically at the needs of rural areas in the State. There is no limitation on use of Section 5311 funds for operating assistance, however, the State must use

Page II-2 PROPOSED FTA C 9040.1G at least 15 percent of its annual apportionment to support intercity bus service, unless the Governor certifies, after consultation with affected intercity bus providers, that the intercity bus needs of the State are adequately being met. In addition, as of FY 2006, Section 5311(b)(3) provides funding for the Rural Transportation Assistance Program (RTAP) as a two percent takedown from the amount authorized and appropriated for Section 5311. From the amounts made available for RTAP, The Secretary may use up to 15 percent to carry out competitively selected projects of a national scope with the remaining balance allocated to the States. States can use RTAP funds for technical assistance, training, research, and related support activities. MAP-21 establishes a new Appalachian Development Public Transportation Assistance Program (49 U.S.C. 5311 (c)(2)). This new program is a funded with a take-down under the Section 5311 program to provide additional funding to States in the Appalachian Region of the United States. The formula is established based on section 9.5 (b) of the Appalachian Regional Commission Code (subtitle 40). Funds may be used for public transportation activities consistent with the formula grants for rural areas program. The funds are apportioned to the following States: Alabama, Georgia, Kentucky, Maryland, Mississippi, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee, Virginia and West Virginia. States that are eligible for the Appalachian Development Public Transportation Assistance Program may use amounts that cannot be used for operating expenses for a highway project if the Governor approves the use in writing after appropriate notice and an opportunity for comment and appeal are provided to affected public transportation providers; and the Governor has determined that the local transit needs are being addressed. In order for FTA to consider the transfer, a State must provide documentation to the FTA regional office that includes: a description of the consultation efforts used to establish stakeholder involvement (i.e. State, local transit operators, and local MPO); and a certification that the funds cannot be used for operating. Upon receipt, FTA will review the request and if approved will transfer the funds consistent with FTA s transfer process. (Please see chapter III of this circular regarding transfer provisions). The Tribal Transit Program includes a discretionary and a formula program. $25 million in formula funds and $5 million in discretionary funds are authorized for this program. There is a three-tier structure for formula funds distribution. Tribal Transit funds should not replace or reduce funds that Indian tribes receive from States through the Section 5311 program. Please see chapter IX for more information on this program. 2. PROGRAM GOALS. Pursuant to 49 U.S.C. 5311, FTA apportions or awards funds to States, Indian tribes, or other eligible recipients located in rural areas for planning, public transportation capital projects, operating costs, job access reverse commute projects, and the acquisition of public transportation service. The Section 5311 program supports both the maintenance of existing

PROPOSED FTA C 9040.1G Page II-3 public transportation services and the expansion of those services through the following program goals: a. enhancing access in rural areas to health care, shopping, education, employment, public services, and recreation; b. assisting in the maintenance, development, improvement, and use of public transportation systems in rural areas; c. encouraging and facilitating the most efficient use of all transportation funds used to provide passenger transportation in rural areas through the coordination of programs and services; d. providing financial assistance to help carry out national goals related to mobility for all, including seniors, individuals with disabilities, and low-income individuals; e. increasing availability of transportation options through investments in intercity bus services; f. assisting in the development and support of intercity bus transportation; g. encouraging mobility management, employment-related transportation alternatives, joint development practices, and transit-oriented development; and h. providing for the participation of private transportation providers in rural public transportation. 3. STATE ROLE IN PROGRAM ADMINISTRATION. To the extent permitted by law, FTA gives the States maximum discretion in designing and managing the Section 5311 program to meet its rural public transportation needs. Where possible, FTA defers to a State s development of program standards, criteria, procedures and policies to provide the State with the flexibility it needs to standardize its management of FTA assistance and related State programs. In addition, under the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Grant Rule) at 49 CFR part 18, the U.S. Department of Transportation (DOT) permits a State to rely on its own laws and procedures instead of Federal procedures in the areas of financial management systems, equipment, and procurement. As noted in 49 CFR part 18, a State may pass its procedures down to its subrecipients that are public authorities. Similarly, when a private provider of public transportation services enters into a third-party contract with a State or public subrecipient of a State, as opposed to a sub-agreement, the State s procedures will apply to the third-party contract. However, private, non-profit subrecipients must comply with the Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations at 49 CFR part 19. FTA delegates authority to the State whenever allowed.

Page II-4 PROPOSED FTA C 9040.1G a. Role of the State Agency. The Governor designates a State agency which will have the principal authority and responsibility for administering the Section 5311 program. Specifically, the role of the State agency is to: (1) document the State s procedures in a State Management Plan (SMP); (2) notify eligible local entities of the availability of the program; (3) plan for future transportation needs, and ensure integration and coordination among diverse transportation modes and providers; (4) solicit applications; (5) develop project selection criteria; (6) review and select projects for approval; (7) forward an annual program of projects and grant application to FTA; (8) certify eligibility of applicants and project activities; (9) ensure compliance with Federal requirements by all subrecipients; (10) monitor local project activity; (11) oversee project audit and closeout; and (12) file an NTD report each year for itself and each subrecipient. b. State Administration of Projects. A State agency may carry out a project directly. The State must exercise adequate oversight to ensure that only eligible activities receive Federal assistance and that subrecipients meet Federal requirements. In administering the project, the State must: (1) provide for appropriate technical assistance for rural areas; (2) ensure that there is a fair and equitable distribution of program funds within the State, including funds to Indian tribes; (3) ensure a process whereby private transit operators are provided an opportunity to participate, including private providers of public transportation services, through service agreements with operators of public transportation services or as subrecipients; (4) expend funds for the support of intercity bus transportation to the extent required by law; and (5) provide for maximum feasible coordination of public transportation services assisted by FTA with transportation services assisted by other Federal programs.

PROPOSED FTA C 9040.1G Page II-5 4. FTA ROLE IN PROGRAM ADMINISTRATION. a. FTA headquarters serves a broad, program level role in the administration of the program. FTA headquarters: (1) provides overall policy and program guidance for the Section 5311 program; (2) apportions funds annually to the States; (3) develops and implements financial management procedures; (4) initiates and manages program support activities; and (5) conducts national program reviews and evaluations. b. FTA regional offices have the day-to-day responsibility for administration of the program. The regional office: (1) reviews and approves State grant applications; (2) obligates funds; manages grants; oversees the State s implementation of the annual program, including revisions to the program of projects; (3) receives State certifications; (4) reviews and approves State Management Plans (SMP); (5) provides technical assistance, advice and guidance to the States as needed; and (6) performs State management reviews every three years, or as circumstances warrant. FTA conducts State management reviews. The reviews examine the State s management procedures, based on the approved SMP. In each area reviewed, a finding is made of compliance or deficiency with corrective action to be taken within a scheduled timeframe. FTA places emphasis on providing the information needed to help the State come into compliance with Federal requirements in all areas. FTA periodically conducts State management review seminars to assist the States in understanding the requirements. If a particular problem area is observed, a more detailed oversight review may be scheduled in such areas as procurement, financial management, drug and alcohol testing, Americans with Disabilities Act of 1990 (ADA), Title VI of the Civil Rights Act of 1964, or any other area. 5. RELATIONSHIP TO OTHER FTA PROGRAMS. Other public transportation-related Federal programs may provide support for Section 5311 projects that enhance the effectiveness of these programs. The following is a brief discussion of existing programs, including programs that were repealed, but for which funding remains available, and those newly authorized under MAP-21.

Page II-6 PROPOSED FTA C 9040.1G a. Repealed Programs: MAP-21 repealed a number of public transportation programs that existed under the previous authorization. Funds that were authorized under these programs remain available for obligation in a grant until the applicable statutory period of availability expires, or until the funds are fully expended, rescinded by Congress, or otherwise reallocated. The relationship of each of these repealed programs to the Rural Area Formula Program is described below. (1) Clean Fuels Grant Program (Section 5308). The Clean Fuels Grant Program was a discretionary grant program that assisted in financing the acquisition of clean-fuel rolling stock and clean-fuel related facilities for agencies providing public transportation and operating in an urbanized area designated as a non-attainment area for ozone or carbon monoxide under Section 107(d) of the Clean Air Act, (42 U.S.C. 7407(d)), or a maintenance area for ozone or carbon monoxide. Funds allocated under this program in Fiscal Year 2012 and prior years will remain available for obligation until they lapse or are expended. Funds apportioned for this program are subject to the program rules and requirements at the time they were apportioned. Grants under this program are subject to the applicable requirements of 49 U.S.C. 5307. (2) Section 5309 Bus and Bus Facilities Program. The Section 5309 Bus and Bus Facilities Program was a discretionary grant program for bus transit projects. This program was repealed under MAP-21 and replaced with the Section 5339 Bus and Bus Facilities Formula Program. From 2010 through 2012, FTA allocated discretionary funding under this program to proposals solicited through several notices of funding availability (NOFAs), including the State of Good Repair Initiative, the Bus Livability Initiative; and Veterans Transportation and Community Living Initiative. Funds awarded in response to these NOFAs are available for obligation until they lapse, and are subject to the program terms and requirements at the time of allocation. (3) Job Access and Reverse Commute Program (JARC) (Section 5316). The Section 5316 Job Access and Reverse Commute Program (JARC Program) was a formula grant program for projects that improve access to employment-related transportation services for welfare recipients and eligible low-income individuals, and that transport residents of urbanized and rural areas to suburban employment opportunities. This program was repealed by MAP-21. Funds that were apportioned to urbanized and rural areas for Fiscal Year 2012 and prior years will remain available for obligation until they lapse or are expended, and remain subject to the program requirements at the time they were apportioned. Guidance for funds apportioned under the Section 5316 JARC Program is contained in FTA Circular

PROPOSED FTA C 9040.1G Page II-7 9050.1, The Job Access and Reverse Commute (JARC) Program Guidance and Application Instructions. While the Section 5316 JARC program was repealed under MAP-21, job access and reverse commute projects are now an eligible project type under the Rural Area Formula Program. Please see Chapter III Eligibility for a list of project types and requirements under Section 5311. (4) New Freedom Program (Section 5317). The New Freedom Program (Section 5317) was a formula grant program that provided funding for capital and operating expenses to support new public transportation services beyond those required by the ADA and new public transportation alternatives beyond those required by the ADA designed to assist individuals with disabilities with accessing transportation services. The purpose of the New Freedom formula grant program was to provide additional resources to overcome existing barriers facing Americans with disabilities seeking integration into the work force and full participation in society. Guidance for funds apportioned under the Section 5317 New Freedom Program is contained in FTA Circular 9045.1, New Freedom Program Guidance and Application Instructions. The New Freedom Program was repealed by MAP-21. Unexpended funds apportioned for Fiscal Year 2012 and prior years will remain available for obligation until they lapse or are expended, and are subject to the rules under which they were apportioned. While the Section 5317 New Freedom Program was repealed under MAP-21, similar projects are eligible under the Section 5310 Enhanced Mobility of Seniors and Individuals with Disabilities Formula Program. Program information will be available in FTA Circular 9070.1G. (5) Paul S. Sarbanes Transit in Parks Program (Section 5320). The Paul S. Sarbanes Transit in Parks Program was a discretionary grant program that provided funding for alternative transportation projects within or in the vicinity of federal lands. The goals of the program were to enhance the protection of America s national parks, refuges, forests and other federal lands, and to increase the enjoyment of visitors. This program was established under SAFETEA-LU and repealed by MAP-21. FTA announced the final allocation of discretionary Transit in Parks funds in February 2013. Funds under this program remain available until they are expended, and are subject to the program requirements at the time they were made available. Projects undertaken outside of federal lands must comply with all metropolitan and nonmetropolitan and statewide planning requirements. b. New and Revised Programs Under MAP-21.

Page II-8 PROPOSED FTA C 9040.1G (1) Urbanized Area Formula Assistance Program (Section 5307). Title 49 U.S.C. 5307 provides funding for capital assistance, planning, and operating assistance for public transportation in urbanized areas. For small urbanized areas with populations less than 200,000, FTA apportions funds to the Governor or the Governor s designee(s) for use in small urbanized areas. Section 5307(g) deems the Virgin Islands a small urbanized area for the purposes of Section 5307. Hence, FTA apportions Section 5307 funds to the Virgin Islands in lieu of Section 5311 funds. In large urbanized areas with populations over 200,000, FTA makes funds available to the designated recipient(s) for capital and planning assistance. A number of urbanized area recipients of Section 5307 funds also receive Section 5311 funds to carry out projects in outlying rural areas. The Governor has the authority to transfer Section 5307 funds apportioned to the State for small urbanized areas to supplement the State s Section 5311 apportionment. The Governor may also transfer Section 5311 funds to supplement the State s apportionment of Section 5307 funds for small urbanized areas. These transfer provisions give Governors greater flexibility to allocate formula transit funds in both urbanized and rural areas to enable States to fully utilize available funds. Guidance for the Section 5307 Urbanized Area Formula Program is available in the most recent version of FTA Circular 9030. (2) Public Transportation Emergency Relief Program (Section 5324). The Section 5324 Public Transportation Emergency Relief Program (ER Program) was newly authorized by MAP-21. The ER Program allows FTA to make grants to public transportation agencies that undergo serious damage as the result of an emergency, such as a flood, hurricane, tornado, tsunami, or other external cause that affects a wide area, and for which the Governor of a State or the President has declared an emergency or major disaster. FTA may make grants under the ER Program for capital projects to protect, repair, reconstruct, or replace equipment and facilities that are in danger of suffering serious damage or has suffered serious damage as a result of a declared emergency. In addition, FTA may reimburse operating expenses associated with storm preparation, immediate response, and recovery efforts, including evacuations, rescue operations, temporary public transportation service, and the cost of reestablishing, expanding, or relocating public transportation route service before, during or after an emergency. FTA has implemented this program in coordination and cooperation with the Federal Emergency Management Agency (FEMA), and will work with FEMA in the aftermath of any disaster to provide support and assistance for any affected agency s recovery efforts. Grants under this program, or those made under Sections 5307 or 5311 to address a declared emergency, are subject to the terms and conditions that FTA determines are necessary. FTA will not provide funding for any expenses that

PROPOSED FTA C 9040.1G Page II-9 are reimbursed by FEMA. This program is implemented by regulation under 49 CFR 602. (3) State of Good Repair Formula Program (Section 5337). The Section 5337 State of Good Repair Formula Program is a formula grant program that provides funding to urbanized areas with High Intensity Fixed Guideway systems and High Intensity Motorbus systems. The program helps maintain these public transportation systems in a state of good repair by financing replacement and rehabilitation projects for existing High Intensity Fixed Guideway systems and High Intensity Motorbus systems that have been in operating for at least 7 years. This program was established under MAP-21, which concurrently repealed the Section 5337 Fixed Guideway Modernization formula grant program. The State of Good Repair funds must be used for capital projects intended to replace and rehabilitate fixed guideway systems and high intensity motorbus systems. Eligible projects include the replacement and rehabilitation of rolling stock, tracks, line equipment and structure, signals and communications, power equipment and substations, passenger stations and terminals, security equipment and systems, maintenance facilities and equipment, operational support equipment (including computer hardware and software), and development and implementation of transit asset management plans. FTA apportions State of Good Repair funds to designated recipients in the UZAs according to a statutory formula. The formula for High Intensity Fixed Guideway comprises: (1) a modified version of the formula used under SAFETEA-LU, reflecting the new definition of fixed guideway; and (2) vehicle revenue miles and directional route miles that are attributable to a UZA. High Intensity Motorbus apportionments are 60 percent based on vehicle revenue miles and 40 percent based on directional route miles. Additional information on the Section 5337 State of Good Repair Formula Program will be available in a separate FTA Circular. (4) Bus and Bus Facilities Formula Program (Section 5339). The Section 5339 Bus and Bus Facilities Program is a formula grant program that provides funding to States and urbanized areas for bus-related capital projects. Under the Section 5339 formula program, funds are apportioned through an initial national distribution that provides $1,250,000 to each State and $500,000 to each territory, with the remainder of available funds apportioned through a statutory formula to States and UZAs on the basis of population, vehicle revenue miles and passenger miles. Section 5307 requirements apply to recipients of grants under the Section 5339 Bus and Bus Facilities program. The Governor of a State may transfer funds